Freeze-fracture replication technique was utilized to study the morphology of type II alveolar epithelial cells and alveolar contents in the late gestation of rabbit fetuses. It was shown that the lamellar inclusion bodies of type II cells were enveloped by the usual type of unit membrane with membrane-associated particles of 15 nm diameter. The interior of the inclusion bodies was composed of multiple stacks and/or whorls of membranes which were devoid of membrane-associated particles. Small vesicles within the inclusion were found more frequently with this technique than in chemically fixed thin-sectioned preparations. The intra-alveolar contents were comprised of two components; sperical bodies, which were identical to the internal contents of the lamellar bodies of type II cells, and tubular elements. These tubules most often appeared rectangular on cross-fractured faces. Triangular hexagonal fracture faces were also noted. The tubules were seen to rest on the surfaces of the spherical components. Our observations suggest that the tubular element of alveolar contents is formed through the interaction between the discharged lamellar body content and the alveolar fluid, and further suggest that at least the major constituent of type II cell lamellar bodies is lipid not bound to protein. Three new observations were made in this study; the absence of membrane-associated particles on the interior of the lamellae of the inclusions, the cross-fractured profiles of tubular elements of the alveolar contents, and the occasional multicompartmental nature of type II cell inclusions.